Senators Mitch McConnell (R-KY) and Orrin Hatch (R-UT) tried to make the case for “trickle-down” economics on the Senate floor yesterday. Unfortunately the Bush tax cuts never created jobs, and their argument is complete nonsense.

[Yesterday’s] jobs report from the Bureau of Labor Statistics paints an ugly picture of lackluster job creation and increasing long-term unemployment. The Federal Reserve — which is taking its own steps to boost employment after dithering for months — has been reduced to pleading with Congress for further fiscal stimulus, in the hopes of averting an even longer jobs slog.

So, naturally, Congress is …debating whether or not the richest two percent of Americans should receive a tax cut (in addition to the tax cut they will receive on their first $250,000 in income if, as everyone in Congress wants, [those] tax rates are extended…).

One more thing. How long are we going to have to listen to Republicans who complain about deficits, while at the same time pushing to explode those deficits? Senate Majority Leader Harry Reid:

“We’ve all heard Republicans weep for the deficit they say they fear. Democrats agree that we need to do something about it,” Reid said. “But what did Republicans do? They…said: Rather than reduce the deficit, we’d really rather give an unnecessary, unwanted and unaffordable handout to the richest of the rich.”

UPDATE: After two failed cloture votes in the Senate this morning, Republicans are now in a position to demand outsize tax cuts for the rich before they will allow the extension of unemployment benefits for millions of jobless Americans. Democrats apparently lack the ability to do anything.
UPDATE: Senator Russ Feingold (D-WI) also voted against the tax cuts, but for the right reason. He wants ALL the Bush tax cuts to expire in order to solve the long-term deficit problem.

I ask this: you bash the republicans about cutting the taxes which,accordingly, will lower the tax reciepts but you do nothing when the democrats vote for massive spending bills without having the money to pay for them? I ask this to: what gives you the right to tax the crap out of a person JUST because he has more money and have half of the population pay taxes and the other half not? I leave you with this warning; greece fell. They were a democracy. Why? power hungry people saught and gained power. Nearly all people in the Federal government want power. WE WILL FALL. AND WE WILL FALL HARD. I WILL STAND AT THAT DAY AND MOURN BECAUSE OF IT BUT I WILL ALSO JOIN IN THE JUDGEMNT AND STAND AND ACCUSE BOTH YOU AND ME BECAUSE YOU CAUSED AND I DID NOTHING TO STOP IT

I’m guessing you stand to make less IN WAGES then Rush Limbaugh or Sean Hannity stand to make in tax relief which requires no effort whatsoever. Otherwise, (if you’re using you’re real name), I have no idea why you’re so upset.

Did you protest this loudly when the Bush administration doubled the National Debt — not only by cutting taxes for the rich but with trillions of dollars of deficit spending for two wars and Medicare Part D?

Who doesn’t pay taxes? Everybody with a job pays payroll taxes. Some of us are unemployed, and we’re still paying taxes. I’m curious. Do you believe in trickle-down economics? Or do you just reject the concept of taxation on principle?

The debate over whether to raise or not raise tax rates under the current system is like debating whether you want to commit suicide by beating yourself to death with a baseball bat or whether you’d rather eat arsenic. Both are stupid, both are suicidal and anyone who debates either side of that choice has no business holding office, blogging, or claiming to have a brain cell.

The very weak unemployment numbers in the face of modest GDP growth are directly related to the last 2 years of punishing employment. The Obama/Pelosi/Reid cult has not figured out that if you make employing people much more expensive, then fewer people will be employed.

The smartest piece of true reform this country could enact would be to permanently separate the connection between employment and healthcare and end all payroll taxes and other burdens related to hiring people. All this revenue could be easily made up with actual tax reform as previously described.

Why anyone thinks that punishing employment is a good idea is beyond me.

The futures’ market was deregulated into insanity. On top of that, something like 20 firms – all gigantic banks – were exempted entirely from what regulations remained. It became possible for them to buy, arguably with taxpayer money, and hold futures contracts, forever, without having to actually hold the underlying product.

I doubt the farmers are getting any of the increase in futures. None at all.

The Obama administration hasn’t figured out that the way to recover the economy is bottom-up, not top-down. They tried some bottom-up measures (e.g. HAMP aka “Extend and Pretend”) but nothing effective from the standpoint of Main Street.

“Trickle-down” economics is a zombie lie, and too many Democrats have been bitten.

Forget the tax cut, offer the rich a tax credit for trading places with an unemployed person for a year. Publicize it with a national reality show hosted by Eddie Murphy and Dan Aykroyd. Good policy, good politics.

Brewski, I think you may be undervaluing what the laborer actually brings to the table.

It’s not what I value. It is what millions of separate decision-makers value. So if one sandwich maker can contribute $15/per marginal hour for his labor to the marginal profits of a Subway, then making his marginal fully burdened cost of labor per hour equal $16 means you won’t hire him or her.

It’s always bothered me that the whining 1% of the powerful super-wealthy get such hefty reward$ for their expertise on the green. Never gotten it.

It’s always bothered me that the left have never gotten arithmetic. Never gotten it.

Suppose you have five dollars at the beginning of each day, and that each day the price goes up for a certain essential item. Each day you bank the remainder.

On the first day of the month, you bank $4.99.

At the end of the month you bank $.01.

What happened?

(And don’t tell me if I the victim had any smarts, he’d never find himself in such a position -there are plenty of reasons anyone might find themselves on the wrong side of some divide the ptb find profitable).

I’m always surprised when I realize how little actual math comprehension the wingnut contingent seems require to self-credential as ‘knowing-it-all’. But that’s just me.

It’s not what I value. It is what millions of separate decision-makers value. So if one sandwich maker can contribute $15/per marginal hour for his labor to the marginal profits of a Subway, then making his marginal fully burdened cost of labor per hour equal $16 means you won’t hire him or her.

Utter nonsense, For one the tax is applied equally to all sandwich makers so product sell price increase to make up for the tax is industry wide and uniform such that their is no lose in competitive edge due to the cost. Second, an increase in the payroll or income tax has no effect on employment so long as their is margin to be made in the product sale.

It doesn’t matter if subway makes 1$ per sandwich or 10$ per sandwich if then need 0.1 hours of labor per sandwich they are still going to hire 0.1 hours of labor per sandwich.

Nor does the rate effect investment, if i can make 100 sandwiches a day at a location with a 15% tax and 100 sandwiches a day at a location with a 20% tax rate and 100 sandwiches a day with a 40% tax, then choice that will lead to the most profits is to make 300 sandwiches per day. We are not nor have we been in an environment where their is not enough investment capital, It just hasn’t happened.

The problem we have right now is that the sandwiches product the same pre tax net profit but different post tax net profits. So the sandwich company gets clever and has the 2 stores in the high tax area’s purchase all of their sandwich makings from the store in the low tax area at an inflated value so that they can report their real income somewhere more favorable rather then where they actually made the income.

And it doesn’t end their, ohh heavens no they figure out that governments at each of their locations don’t share tax records, and being a clever capitalists that they are they figure out they can give each government a different set of books and make it look like all of their stores are running at a loose getting themselves out of paying any taxes what so ever. And all they need to pull that off is a few loose tax laws(insert Ireland/Europe) and a heaven that charges no income taxes(insert Caymons/Chrismas Island).

It’s always bothered me that the left have never gotten arithmetic. Never gotten it.

It’s always bothered me that the right has never gotten growth and decay problems or complex numbers or exponential growth. Nope never gotten it.

Sorry Mr. Hunt. It just aint true that you will hire someone at $16/hour to make $15 incremental revenue. No one knowingly chooses to lose money. You just won’t convince me or anyone that matters that payroll burden doesn’t matter.

What is charged for payroll taxes is no where near causing the sort of backwards effect you describe. The payroll taxes in no way shape or form prevent subway from making money and their for leaving the market entirely.

The worst effect from the taxation we have is that it slightly lowers the after sale after tax margins made by corporations.

At the end of the day the “Sandwich” company is still making 300 sandwiches. Or at least they where until the recession hit now their making 240 sandwiches, of course due to the base operating cost of their rent(not tax related) and the ingredients(not tax related) going up in price to adjust extra risk to the ingredient producers due to lack of credit they are only profitable so long as they make more then180 sandwiches.

Which according to conservatives is due to, to high of taxes which they will pay for by cutting social security, medicare, state and federal workers, unemployment insurance, and other stimulus programs.

While the tax cuts will allow the company to stay above water so long as they sell 170 sandwiches, they will loose more customers then 10 sandwiches worth of profit due to the loose of buying power in those groups effected by the tax cuts. Of course they like many businesses will cut an employee or 2 and can squeeze themselves down to 160 sandwiches per day, which between everyone else did that as well loses them more then 10 sandwiches worth of sales.

Of course when their bank reduces their credit line and they have to make up the extra costs of risk in the supply chain, so they raise prices and loose another 10 sandwiches in sales due to pushing people out of their affordability range.

Thank god for those tax cuts tho ehh? the sandwich shops only traded 30-40% of their customer base for a 3% change in their tax rate. Ohh yea that makes so much sense lemmy tell yea.

I’m glad you inserted the distinction between ‘You’ and ‘anyone that matters’. That being the case, I suppose one could argue that ‘I’ matter.

As for my point above, it is that – while at times, you may have a valid point, you often sabotage discussion when you veer into generalizing about what the left and their ilk can handle / comprehend / value. It is my sense that you have little comprehension of that, but that you throw such knocks out there only serves to push me (and others I would guess), away.

Other than that, I suggested that had the sandwich maker been black, female, or disabled, any talk of $ amounts would be different in each case, so your bottom-line presumption leaves something to be desired. (I have read those books – whoopie).

Finally, you have completely overlooked the executives who, often for reasons of inherited or stolen wealth, have ‘created’ the ‘opportunity’, but beyond that probably add no more value to the enterprise than anyone in the lower echelons, be they janitors, the commercial artist designing the ad campaign, or the lettuce prep gal. It is my contention that when all is said and done, the CEO in not inputting an illion times more value than the others. Not by a long shot.

If one adds all the current and lefty-desired burdens on an hour of labor one can easily surpass100% of an hour of wages. If you tale take the wage, plus social security, plus medicare, plus workers comp, plus health insurance, plus paid vacation, plus paid sick time plus paid maternity/paternit time, plus 401k match, plus tuition reimbursement, etc. you can easily get to $20/hour for a $7.25/hour employee. Trust me, I know this first hand.

A sandwich maker can only make so many sandwiches in an hour. So if the profit per labor hour goes negative, then the person doesn’t get hired. I don’t know how you can argue with that.

I probably have not commeted on the pay of CEO’s and the like. There is a big problem here which needs to be solved and can be solved not in the way you might expect nor is being talked about much.

The problem here is how companies are governed and how compensation is set. The way it is supposed to work is that boards are supposed to represent sharehilders, but they don’t. They are really appointed by the CEO and more beholden to the CEO than they are to shareholders. This is backwards. The shareholders are supposed to pick the board and the board hires the CEO. The CEO is supposed to be the hired help and not the emporor of the company who also rules over the board.

The answer here is for the SEC to change our corporate governance laws. The governance laws would be writte where shareholders nominate and elect board members, board members hire and fire the CEO. The CEO report to them. NO officers may be board members, period. Shareholders are free to nominate board members.

This is not how it is done now. If this were done a lot would change with regard to how companies are run and how executives are paid.

What a great theoretical discussion. Doesn’t prove that economic collapse is on the way if we simply go back to the tax rates in effect nine years ago.

I think that having such extreme income inequality helped bring about the financial sector meltdown. Too much investment capital was chasing too few opportunities to invest in the real economy. Result: lots of dicey derivatives were sold to investors chasing bigger returns.

Thank you brewski. I agree. We should be talking about it more, because it doesn’t seem to be what the shrieking heads incessantly go over – at all. Their protestation and manipulation reflect, for me anyway, either great fear, or wanton greed. In either case, regulatory or other interventions would save everyone else a great deal of pain.

Richard, don’t you just marvel at the chicanery – stripping and shipping ‘wealth’, round the clock, and with powerful computers, from whatever locality that seems to have any? These sharks have done an incredible job of understanding, and nowadays even helping create, the loopholes they ceaselessly manipulate.

Also, talking of extreme inequality – this can’t be scoped through the notion that is only the big and little people of the U.S. of A. Disclosure that the fed bailed out German banks and Obama creating jobs in Korea suggest we are dealing with a global economy resting on the shoulders of the American taxpayer.

That ain’t right and is the opposite of sustainable. I suspect we’ll either be picked to the bone, whereupon our corpse will be caste aside for new, relatively wealthy pickings, or, there’ll be a revolt.

Cav,
I have zero confidence that the shreiking heads will ever talk about corporate governance. First, it seems like a big snoozer ratings killer, so they’d rather talk about Bristol Palin. Second, they don’t understand it any more than they understand behavioral economics, agency cost, dynamic analysis and pretty much everything else that is beyond them. It is much easier for them to frame everything in terms of winners and losers and congressional votes.